Form 5500 Filing for Calendar Year Plans Due July 31
Each year, PPI Benefit Solutions files the Annual Return/Report Form 5500 Schedule A for the ACSA and BIEB Group Insurance Trusts. This filing includes all coverages provided and administered through the Trusts, eliminating the need for Trust members to file for these coverages. Clients may be responsible for filing Form 5500 for benefits and products purchased outside of the ACSA or BIEB Trusts, as well as any employer-sponsored fringe plans such as cafeteria plans, educational assistance plans, or legal plans.
Applicable plan sponsors must file Form 5500-series returns on the last day of the seventh month after their plan year ends. As a result, calendar-year plans generally must file by July 31 of this year (reporting on the 2020 plan year). (Keep in mind, though that the actual due date will be August 2, 2021, since July 31 falls on a Saturday.) Plans may request a two-and-a-half-month extension to file by submitting Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, by that plan's original due date.
As a reminder, group health plans sponsored by a governmental or church entity aren’t required to file a Form 5500, as those plans aren’t subject to ERISA. Additionally, unfunded, insured or combination unfunded and insured health plans with fewer than 100 participants on the first day of the plan year are also exempt from the filing.
PCOR Fee, Form 720 Filing Due July 31
The ACA imposed the PCOR fee on health plans to support clinical effectiveness research. The PCOR fee applies to plan years ending on or after October 1, 2012, and before October 1, 2029. The PCOR fee is generally due by July 31 of the calendar year following the close of the plan year. (Keep in mind, though that the actual due date will be August 2, 2021, since July 31 falls on a Saturday.)
PCOR fees are required to be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. Plan sponsors that are subject to PCOR fees but no other types of excise taxes should file Form 720 only for the second quarter. No filings are needed for the other quarters for such employers.
The PCOR fee is generally assessed based on the number of employees, spouses and dependents that are covered by the plan. For plan years ending in 2020 on or before October 1, 2020, the fee was $2.54 multiplied by the average number of lives covered under the plan. For plan years ending between October 1, 2020, and October 1, 2021, the fee increased to $2.66. Form 720 and corresponding instructions were revised to reflect the increased fee.
The PCOR fee can be paid electronically or mailed to the IRS with the Form 720 using a Form 720-V payment voucher. According to the IRS, the fee is tax-deductible as a business expense.
As a reminder, the insurer is responsible for filing and paying the fee for a fully insured plan. The employer plan sponsor is responsible for filing on a self-insured plan, including an HRA. A stand-alone dental or vision HRA would be excepted and wouldn’t be subject to the PCOR fee.
ARPA Tax Credit, Form 941 Filing Due July 31
The American Rescue Plan Act (ARPA) allows employers and insurers to claim a tax credit for the COBRA premium subsidies they pay on behalf of assistance eligible individuals (AEIs). The credit is credited against the Medicare hospital insurance tax and is fully refundable, which means that the employer or insurer claiming the credit can receive a payment from the IRS if the amount of the credit exceeds their Medicare hospital insurance tax obligations (including where they do not owe any Medicare hospital insurance tax).
Remember that employers are eligible for the tax credit if they maintain self-insured plans or their fully insured plans are subject to federal COBRA. Insurers can claim the credit if they cover plans that are subject only to state healthcare continuation laws. Note that in the event of multi-employer plans, the plan itself can claim the credit.
The employer or insurer can claim the credit for periods covered by the premium subsidy, and they are entitled to the credit as of the date the AEI elects COBRA coverage. For instance, if an AEI elects COBRA coverage on July 1, and that coverage is retroactive to April 1 (the first day of the ARPA premium subsidy period), then the employer or insurer can claim the credit for the period beginning on April 1 through July 1. If the AEI continues the COBRA coverage through July, then the employer or insurer can claim a credit for that period too.
The employer or insurer claims the credit on its quarterly employment tax return, Form 941. They may reduce deposits of federal employment taxes (including amounts withheld from employees) up to the amount of the anticipated tax credit and then report the tax credit claimed, and the number of individuals receiving the tax credit for that quarter, on the Form 941. Since the return covers the months of April, May and June, the next filing is due on July 31, 2021.
Employers and insurers can obtain an advance on the tax credit by filing Form 7200 (which can only be filed via fax); however, they are still responsible for claiming the credit on Form 941.
If an employee is on a leave of absence, can they still contribute to a health FSA, dependent care FSA or HSA? Also, must employer HSA contributions continue during the leave period?
This material was created by PPI Benefit Solutions to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The service of an appropriate professional should be sought regarding your individual situation. PPI does not offer tax or legal advice. "PPI®" is a service mark of Professional Pensions, Inc., a subsidiary of NFP Corp. (NFP). All rights reserved.